Lessons in partnering from Biocon-Pfizer deal termination

The deal termination between the two companies has given the industry and the analysts much to talk about. Are there lessons to learn from this? BioSpectrum finds out

A company must understand the strengths and weaknesses of the other company before entering into a partnership

In March 2012, the termination of a multi-million dollar deal between India's top biotechnology company Biocon and global pharmaceutical company Pfizer shocked the industry. It has given the industry and the analysts much to talk about and, perhaps, some lessons to learn.

The shelving of the deal can be a huge learning for companies seeking growth through partnerships at a time when an impending patent cliff is putting pressure on the revenues of big pharmaceutical companies and the Asia Pacific region is emerging as the favored destination for drug discovery and manufacturing to counter high costs of R&D and manufacturing.

Sharing his thoughts on the Biocon-Pfizer deal call-off, a representative from Genentech, says, "Mishaps happen when interests clash. In this case, it is assumed that the priorities of Pfizer had changed because the cost advantage went lower than their expectation, and they did not see much profitability in this partnership."

Dealing with partnerships

Pharmaceutical companies have two ways of entering into partnerships. It can be a business model for cost advantage that can be done through outsourcing or it can be a partnership for innovation. For instance, if an MNC is looking to leverage the benefits of the China market, outsourcing could be the most viable option. However, a long-term partnership is the right way for innovation.